Time to get managed-care Medicaid right

Desperate to save $375 million in three years, the Beshear administration made the transition to managed care so swiftly that a rough startup was inevitable.

Medicaid is showing some encouraging upticks in preventive care, such as more well-child visits and diabetes testing.

But the main managed-care strategy still seems to be choking off payments to providers. This is creating a massive transfer of wealth from Kentucky medical practices and hospitals to for-profit companies based in other states.

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The delay and denial of payments are creating financial crises for providers and pharmacies and forcing small hospitals to lay off employees, deplete reserves and default on bonds.

For patients, the companies are putting up barriers to care that would be illegal in the private sector.

The new burdens that have been placed on vulnerable Kentuckians and their medical providers threaten to unravel not just the safety net but, in some places, the whole health care system.

The legislature and federal government must step in.

Awaiting action in Frankfort is bipartisan legislation to curb some abuses, including the stiffing of hospitals that provide emergency care as required by federal law.

After the legislature adjourned last year, Kentucky hospitals were told they would be paid a $50 fee for Medicaid claims determined by the managed care companies not to be emergencies. The hospitals say the managed care companies think almost nothing is an emergency, not even head injuries, broken bones or an emergency appendectomy.

House Bill 299 and Senate Bill 178 would also curb the false economy of severely limiting in-patient mental-health care for children while referring them to nonexistent out-patient care.

Medicaid managed care companies also would be required to:

■ Meet the same provider network standards, including distance to hospitals and obstetrical care, as other insurers operating under Kentucky law.

The state recently granted the managed care companies a seven percent rate increase. The companies have said they're losing money here and one is pulling out in July.

But at the end of the first eight months of managed care Medicaid, the state had paid $500 million more to the companies than the companies had paid to providers — a pretty healthy float.

Appalachian Regional Healthcare, which serves some of Kentucky's poorest places, is seeking to make the U.S. Department of Health and Human Services and Secretary Kathleen Sebelius defendants in a lawsuit that alleges the new system is out of compliance with federal law.

The feds shouldn't have to be dragged in. Seventy cents of every Medicaid dollar spent in Kentucky comes from the federal government. Expanding Medicaid to include more low-income people, beginning next year, is a linchpin of federal health care reform.